Big Challenges for Small Businesses Growing Exiting Producer’s Name and Title Principal Financial Group ®

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Business Owner and Executive Solutions

Four Challenges for the Business Owner 1.Business Succession Planning 2.Recruiting, Retaining and Incenting Key Employees 3.Converting Profits To Wealth 4.Raising capital, recruiting talent, without losing control

Challenge 1: Business Succession Plans Implementing a well-crafted and funded buy-sell agreement and/or various other exit planning strategies are the foundation of a healthy business.

Challenge 1: Agreements Between Owners What happens if: The relationship between owners sours? An owner dies? An owner becomes disabled? 5 additional “triggers”?

Challenge 1: Agreements between Owners Common pitfalls No formal agreement Poorly structured agreement No funding Antiquated agreements

Challenge 1: Agreements between Owners Questions to ask Are all possible “triggers” included? Is business valuation clear, specific, appropriate, continuous? Is a “mandatory buy-out” required upon death and/or disability? Is “disability” defined and consistent?

Challenge 1: Agreements between Owners Clarity TIMING A Financial Bridge

Challenge 2: Hiring, Retaining, and Incenting Key Employees Who is the difference maker in your company? Immediately change operations, customer relations, profitability Significant recovery time

Challenge 2: Hiring, Retaining, and Incenting Key Employees Hiring the difference maker Compete with compensation and benefits Consider customized benefits Align commitment with vesting

Challenge 2: Hiring, Retaining, and Incenting Key Employees Retaining and incenting the difference maker Love what they do Tie performance to reward Futures in-sync

Challenge 2: Hiring, Retaining, and Incenting Key Employees Retaining and incenting the difference maker Money is a tool Significance and durability Reward commitment by “growing” the bonus

Challenge 2: Hiring, Retaining, and Incenting Key Employees Executive Bonus Plans Nonqualified executive benefit plans Flexible vesting Tax advantages Market- or company-based growth

Challenge 3: Converting Profits To Wealth Why are you in the business?

Challenge 3: Converting Profits To Wealth A business owner’s financial priorities Financial protection Income protection Wealth preservation

Challenge 4: Raising capital without losing control Ways to acquire capital Personal savings Lending institutions Credit lenders Venture capitalists and additional owners

Challenge 4: Raising capital without losing control The pitfalls of sharing ownership Control Valuation Dissolution

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